The Truth About Restaurant Profitability

What business are you in? Sure, you run a restaurant, but in reality, you’re in the retail sales business. You have a product that you want to sell, and you depend on your staff to work together to sell it at the highest profit margin possible. Your smart business goals are tied to the financial performance of your restaurant. And, most likely, you’re compensated in some way based on profitability goals as well. The difference between you and the manager of the shoe store down the street is that your guests have already decided they want to buy before they even walk in the door. The hardest part of the sales process is already done before your restaurant’s cycle of service even begins.

Staff Profitability = Restaurant Profitability

Your restaurant has an advantage over other retail establishments in another very significant way – when your servers make more money, so do you. While this may be somewhat true for retail stores who offer commission incentives, there’s no business that compares to the tipped pay structure of restaurant servers. Just increasing check averages by only one dollar can make or break the bottom line for both you and tipped employees.

The Teamwork Angle

It requires the effort of everyone on your team – not just servers – to increase profitability. When you take a team approach to restaurant sales, you’ll see profits go up. Start by finding ways to structure your incentives, contests, and rewards so that the same star servers aren’t winning all the time. Pair up employees or create teams that include support and kitchen staff as well as servers.

Sharing Your Profitability Goals

If you expect your staff to help you achieve your profitability goals, you have to share them. There are a few ways to do this. Communicating a big picture view of your goals helps your staff understand how your sales compare to other units in your operation, competitive restaurants in the area, or even to national restaurant trends. Opposite of the big picture is, of course, the details. When you communicate the details of your profitability goals, your employees learn how things like margins, waste, and food costs affect profits. In order to get your staff to buy-in to your profitability goals, you need to show employees the connection between their performance and the overall performance of the restaurant. Give them real-world examples of how their efforts contribute to the restaurant’s vision and mission. Provide the restaurant employee training that will help ensure they have the skills they need to be effective.